The crypto industry needs to fix itself too – CoinDesk

Crypto is stuck between a proverbial rock and a hard place, and there’s a lot of guilt to go around.

Pick the culprits: the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and their assortment of lawsuits, the inability of the US Congress to pass any significant blockchain legislation, a flawed Biden administration “Economic Report of the President” with 30 pages that hit the industry, the shutdown of two of the most crypto-friendly US banks (Signature and Silicon Valley Bank), the Terra implosion and its repercussions, the FTX failure and its repercussions, the ongoing wave of decentralized finance (DeFi) exploits in vulnerabilities, blockchain -bridge failures, token prices, increased negative public opinion, reduced institutional holdings – just to name a few major issues facing the blockchain industry today.

While some of these can be classified as “they did this to us”, others are clearly in the “we did this to ourselves” bucket.

One could easily argue that the increased heat coming from external sources is a result of the internal mess that the industry itself was responsible for. Judging by the timing between the internally generated problems and the increase in external pressure, there is reason to believe in a strong cause-and-effect relationship between these types of factors.

The crypto/blockchain industry did not intend to create spectacular failures as part of its development, but it happened. While no one expected the industry to grow flawlessly (as no revolution is tidy), the scale of hiccups and frequent wobbles have been excessively distracting and damaging, despite blockchain’s promise being essentially unbroken.

As I look around to gain some perspective, I see three reasons why the industry is in hibernation.

The first is the SEC’s attack on the industry. The second is the inability of Congress to pass laws that could set the industry in a significant new direction, or even slow down the SEC ramifications. These are well-known reasons, but they are a prelude to the third.

There is no point in hashing out details about these two factors except for a couple of observations.

As for the SEC, then-FTX CEO Sam Bankman-Fried’s donation breadcrumbs pointed to the Democratic Party, and it was a vexing situation that SEC Chairman Gary Gensler saw as an opportunity to vindicate his party by turning up the volume on enforcement actions, therefore erase the belief that Democrats were not strong enough on crypto regulation.

Ironically, the SEC acronym might as well stand for Sue Everyone in Crypto.

As far as the US Congress is concerned, blockchain has been uncharted territory. Members are not well informed about crypto. Perhaps 95% of Congress continues to be challenged by the blockchain, and they still have a steep learning curve about it, despite some efforts to accumulate knowledge.

Both the SEC and the US Congress are the crypto accountants today. But if it were a race to change, the SEC arguably wins because it has been much more nimble than Congress. As Congress watches one bill after another move through the two chambers like a revolving door (over 50 bills have been proposed in the past two years), the SEC already has a playbook on which to act. Meanwhile, the US Congress continues to propose bills by throwing darts at a board.

This brings us to the third factor, and it relates to us, the industry.

So let’s look at ourselves in the mirror because we too are part of the problem.

Let’s stop giving pundits, regulators or politicians free ammunition to launch attack after attack on crypto. These critics have feasted on crypto misadventures over the past year, to the point where they want to define us by our failures and not by our successes, potentials or benefits.

We have already seen the plans and patterns of failure. Can we identify them earlier and squeeze them before they can be systemically harmful? Can we call out bad actors early and often?

Can we improve by a factor of 10 on vulnerabilities in smart contracts and not leave one hole disconnected?

Can we stop the creation and pumping of useless tokens that have no future but to deceive uninformed consumers?

Can we intelligently distinguish between good and bad projects? Could we at least leave the early parts of their journey in the domain of private investors and shield consumers from the extreme risks that come with any startup venture?

Can we raise the compliance and transparency standards for token projects so that there is consistency and relevance across their disclosures, in the same way that public companies report their progress?

Can we work with true industry interoperability standards so that a user doesn’t have to choose which blockchain layer to send the transaction on? (Imagine if you had to choose an Internet subnet every time you connect to the Internet.)

Perhaps there is too much “finance” in crypto and blockchain, making it an easy target for regulators and lawmakers because it’s all they see and all they choose. Can we go back to working with and highlighting user-based use cases in mobile apps and websites?

Can we put a moratorium on new tokens for a year? It can help move the conversation away from regulation and lawsuits and more towards Web3 adoption.

Can the media do more investigative journalism to unearth the more interesting projects instead of being an echo chamber that gives up and rewrites the same news day in and day out?

Can we build killer use cases with mainstream user experiences so that we can stop being on the defensive and start showcasing the real potential of the blockchain beyond just price speculation and stock market-like activity?

Could there be more “build without code” solutions so that non-techies can create blockchain-based features and integrate features into their own businesses as easily as building a website, adding a WordPress plugin or a Shopify widget for to launch a new ability?

We can point at regulators and authorities all we want, but we also need to start fixing a few things ourselves.

If we can stop the failures, we will irrevocably increase the successes.